Bidders may protest the awarding of DWSD contracts to Lakeshore

Two competitors with Lakeshore TolTest Corp. could lodge bid protests before the Detroit Water and Sewerage Department within days, after the department's governing board awarded Lakeshore $60 million of contract work and then reassigned it to a different company.

The Board of Water Commissioners last week awarded Lakeshore two three-year sewer lining and repair contracts worth $30 million each, for the city's east and west sides, and a separate authorization measure to assign those two contracts from Lakeshore to Lakeshore Global Corp.

Lakeshore Global, an entity that shared a corporate address and some principals in common with Lakeshore TolTest until recently, remains based in Detroit and is managed by Avinash Rachmale, former chairman and CEO of Lakeshore TolTest, sources told Crain's.

Lakeshore TolTest, or LTC, has been headed by Chairman-CEO Grant McCullagh since late 2012 and submitted the original two contract bids to DWSD sometime in mid-2013. It relocated its headquarters to Chicago a few months ago.

McCullagh did not respond to requests for comment last week. Adi Dalvi, a director of business development for Middle East/North Africa oil and gas programs at LTC, deferred comment to Andrew Haliw, executive vice president and general counsel at Lakeshore TolTest, who also did not respond to requests for comment.

Audrey Young, strategic communications adviser to Lakeshore TolTest at Holland & Knight LLP, also declined to comment publicly on the Chicago move or separation of companies, but said she does not represent Lakeshore Global.

Detroit-based Inland Waters Pollution Control Inc. and Blaze Contracting Inc. also vied for the lining and repair contracts, and voiced their opposition to Lakeshore's "irregular" bid at DWSD board meetings.

A main concern for both companies is that the company that bid on the contracts isn't the same one that will perform on it, which appears to violate the terms of a request for proposals DWSD put out on both contracts last year.

Gayl Turk, Blaze director of business development, and Michael Jacobson, an attorney for Inland Waters at Southfield-based Jaffe, Raitt, Heuer & Weiss PC, said the companies will decide shortly whether to file a bid protest of the Lakeshore award.

"I know Lakeshore has a settlement with the DWSD that was supposed to pay out in installments and I understand those aren't done yet," Turk said. "So they're evaluating a company they have an interest in. That was just one of the things that seemed irregular to me."

Among the others, Jacobson said, is that Lakeshore TolTest was able to reassign its previous bid to someone else after submitting it, and that Lakeshore Global did not have to disclose records on its bonding capacity, financial status or personnel, as the other bidders have done.

The contract requirements in DWSD's bid solicitation last year state that "no modification or revision to any proposer's proposal form ... will be accepted, nor will a proposer be allowed to withdraw its proposal and submit another proposal for the work," once the deadline for bids has passed.

"They're not following their own rules. That was a part of the bid package, that the proposer cannot be modified," Jacobson said. "And Lakeshore Global is not the proposer. So what the department did is make the allowance, to say, 'Lakeshore TolTest, you stay on as the proposer, but you can somehow assign your proposal after the fact to someone else.' "

Competitors had seven days to respond after the water board's contract decision last Wednesday.

Lakeshore was also one of 14 companies DWSD suspended in December 2011 from contracting with the department as nonresponsible bidders, based on their connections to the so-called Kilpatrick enterprise.

The company challenged the suspension, but Lakeshore and two others later agreed to withdraw from DWSD bids for one year.

Lakeshore Global then won a three-year, $21.8 million contract last October with Lakeshore to provide supplemental staffing and help manage corrective maintenance and related construction at sites such as water treatment plants and stations.

But that contract is now on hold, according to Detroit Emergency Manager Kevyn Orr's office.